Logo of Phnom Penh Post newspaper Phnom Penh Post - Vietnam firms not ready for higher minimum wages

Vietnam firms not ready for higher minimum wages

Content image - Phnom Penh Post
Vietnamese firms calculate their costs based on fixed wages at the beginning of the year, making raising minimum wages around mid-year even more burdensome. VIETNAM NEWS AGENCY

Vietnam firms not ready for higher minimum wages

The Vietnam General Confederation of Labour has proposed a seven per cent increase in minimum wages from July 1, but many insiders gave a thumbs down to the proposal.

Garment 10 Corp deputy director-general Bach Thang Long underlined that the resurgence of the pandemic in the first quarter had a negative impact on firms’ financial situation.

Higher payroll costs would add to their woes, putting a strain on small-sized firms.

He suggested the increase in minimum wages be put off until 2023 and cover only inflation to leave room for firms to recover.

“Minimum wages should increase only to offset the rise in inflation. Economic growth and living standard should be factored in next time,” he said.

Nha Be Garment Corp union chairwoman Huynh Thi Hong Cuc said the wage increase would apply to only those workers that have been paid under the minimum level.

However, a pay rise to only a specific group would make other workers unhappy, forcing her firm to raise wages across the board.

Accordingly, she estimated that her firm’s labour costs would increase by 10 per cent should minimum wages rise by five per cent, adding hundreds of billions of dong to its wage bills.

“Our firm has over 15,000 workers on payroll with eight wage levels. Workers of level 1 alone incurred an additional cost of up to 11.5 billion dong [$503,000] during the wage rise in 2020,” she added.

Pou Sung Vietnam Ltd union chairman Le Nhat Truong revealed that his firm faced the same situation.

He said it was not compulsory to raise wages for those workers who had been paid above the minimum level.

However, not paying more during a wage rise would cause dismay for the workers, resulting in dissatisfaction.

“Accordingly, over 22,000 workers of ours received higher wages during the wage rise in 2020 although none had been paid under the minimum level,” he said.

The union chairman was concerned that the proposed seven per cent increase in minimum wages this year would add about 180 billion dong to his firm’s financial burden.

Ho Chi Minh City Food and Foodstuff Association vice-chairman Truong Tien Dung believed that the rise in wage bills would be passed on to product prices, fuelling inflation.

Firms that refuse to price up their products would have no choice but to shed staff to cut costs.

Vietnam Chamber of Commerce and Industry vice-chairman Hoang Van Phong believed that an increase in minimum wages was needed after two years without an adjustment.

However, the incremental pay scale needed further discussion to assess its impact on firms’ financial situation.

He also said that it was unreasonable to raise minimum wages around mid-year since firms calculate their costs based on fixed wages at the beginning of the year.

Accordingly, the wage increase was recommended to move to another date.

The National Wages Council is expected to hold another meeting on April 12 to further discuss the proposal.

VIET NAM NEWS/ASIA NEWS NETWORK

MOST VIEWED

  • Research key to Kanitha’s rep for expertise

    Sok Kanitha is used to weighing in on controversial issues using a confident approach that signals expertise and authority, and a recent video she made was no exception. Her “Episode 342: The History of NATO” video went live on January 16, 2023 and immediately shot to 30,000 likes and 3,500

  • Cambodia maintains 'Kun Khmer' stance despite Thailand’s boycott threat

    Cambodia has taken the position that it will use the term "Kun Khmer" to refer to the sport of kickboxing at the upcoming Southeast Asian (SEA) Games, and has removed the term Muay from all references to the sport. Despite strong reactions from the Thai

  • Artificial insemination takes herd from 7 to 700

    Some farms breed local cows or even import bulls from a broad for the purpose of breeding heavier livestock for meat production. One Tbong Khnum farmer has found a more efficient way. Hout Leang employs artificial insemination to fertilise local cows. Thanks to imported “straws”

  • Chinese group tours return to Cambodia starting Feb 6

    Cambodia is among 20 countries selected by Beijing for a pilot programme allowing travel agencies to provide international group tours as well as flight and hotel packages to Chinese citizens, following a three-year ban. As the days tick down until the programme kicks off on February 6,

  • Capital-Poipet express rail project making headway

    The preliminary results of a feasibility study to upgrade the Phnom Penh-Poipet railway into Cambodia’s first express railway indicate that the project would cost more than $4 billion and would take around four years to complete. The study was carried out by China Road and

  • Thai boxers to join SEA Games’ Kun Khmer event

    The Cambodian SEA Games Organising Committee (CAMSOC) – together with the Kun Khmer International Federation (KKIF) and Khmer Boxing Federation – have achieved a “great success” by including Kun Khmer in the upcoming biennial multi-sports event on its home soil for the first time, said a senior